Book-to-Tax Reconciliation (M-1)
Unadjusted Book Income
1,250,000.00
+ Adjusting Journal Entries
15,000.00
Adjusted Book Income
1,265,000.00
Permanent Differences
| Description | Book Amount | Tax Adjustment | Source |
|---|---|---|---|
| Meals Expense - 50% Disallowance | 12,500.00 | 6,250.00 | Auto-TB |
| Entertainment - 100% Disallowance | 3,200.00 | 3,200.00 | Auto-TB |
| Officer Life Insurance Premium | 8,000.00 | 8,000.00 | Manual |
| Subtotal - Permanent | 17,450.00 |
Temporary Differences
| Description | Book Amount | Tax Adjustment | Cumulative |
|---|---|---|---|
| Depreciation - Book vs Tax ⚠️ +47% vs PY | 95,000.00 | 45,000.00 | 180,000.00 |
| Prepaid Expenses | 15,000.00 | (5,000.00) | 10,000.00 |
| Accrued Bonus | 25,000.00 | 25,000.00 | 25,000.00 |
| Subtotal - Temporary | 65,000.00 | 215,000.00 |
Adjusted Book Income
1,265,000.00
+ Permanent Differences
17,450.00
+ Temporary Differences (Current Year)
65,000.00
Federal Taxable Income
1,347,450.00
Depreciation M-1 is 47% larger than prior year
Prior year: $30,600 | This year: $45,000
This could be due to new asset additions or bonus depreciation elections.
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